The Federal Government has announced changes to the Indigenous Procurement Policy (IPP) to strengthen registration requirements of joint venture arrangements.

From 1 January 2019, incorporated Indigenous joint ventures must register with Supply Nation and be at least 50% Indigenous owned and demonstrate 50% Indigenous involvement in the management and control of the joint venture.

In addition to the new requirements, the Joint Venture must also have in place:

a strategy to build the capability and skills of the Indigenous business partner and;

an Indigenous workforce strategy.

We have developed these templates in partnership with the Department of Prime Minister and Cabinet. Please download the skills and capability template here and the Indigenous workforce strategy template here.

What are the changes to the registration requirements for Indigenous joint ventures?

From 1 January 2019, incorporated Indigenous joint ventures must register with Supply Nation to be eligible to bid for Commonwealth contracts under the Indigenous Procurement Policy.

Who will the changes apply to?

The changes will apply to all incorporated joint ventures who are seeking to bid for Commonwealth contracts under the Indigenous Procurement Policy (IPP). This includes newly formed joint ventures and existing joint ventures already registered with Supply Nation.

What criteria must a joint venture meet to become and remain registered with Supply Nation?

In order to be registered with Supply Nation as an incorporated joint venture, a joint venture must meet the following criteria:

for the purposes of the IPP, a joint venture will need to be an incorporated company (registered with ASIC) formed through the incorporation of an Indigenous business and a non-Indigenous business;

the joint venture must be at least cumulatively fifty percent (50%) owned by an Aboriginal and/or Torres Strait Islander person(s);

the joint venture must be able to demonstrate at least fifty percent (50%) Indigenous control of the joint venture and Indigenous involvement in the management of the joint venture.

the joint venture must be for profit in that the joint venture is able to distribute its equity to its shareholders and not be a registered charity in it’s own right;
able to trade as a business in its own right;

must be registered in Australia;

demonstrate Commercial Independence.

In addition to these requirements, the Joint Venture must also have in place:

a strategy to build the capability and skills of the Indigenous business partner and;

an Indigenous workforce strategy.

What constitutes commercial independence of a joint venture?

To be Commercially Independent, a JV must ‘’reflect a collaboration of the JV parties’ resources, skills and assets and not totally or fundamentally depend on non-commercial relationships and use of resources (e.g. equipment, personnel, facilities, financial or bonding support) with another non-Indigenous enterprise or enterprises to deliver its core service offering(s).’’

How does a joint venture demonstrate commercial independence?

In determining if a joint venture is Commercially Independent, Supply Nation will require joint venture to demonstrate that it:\

is a separate Incorporated commercial entity;

has Indigenous involvement at the executive and/or board level with either of the following:
a. a separate Board of Directors where an equal or majority vote is exercised by Indigenous directors and an Indigenous Chair;
b. an Indigenous MD; or a non-executive management structure that reports to a higher Indigenous held position (e.g.: CEO or Chair)

has clear delegations of authority and power;

has a constitution that reflects the Indigenous involvement in the control and management of the joint venture;

has a Joint Venture Agreement or Shareholders Agreement that reflects the Indigenous involvement in the control and management of the joint venture;

commercially sources and acquires their resources;

has a Shared Services Agreement with its non-Indigenous partners if accessing resources from said partner;

has internal associated costing and cost centre allocations;

has independent procurement powers outside of a parent/partner entity;

ensures that the Indigenous member of the Joint venture is responsible for a clearly defined portion of the work to be performed with its own forces.

What are the documentary proofs required to demonstrate compliance for registration as a joint venture?

To register a joint venture with Supply Nation, the joint venture MUST provide to Supply Nation the following documentation:

a completed registration application;

confirmation of Aboriginality or Torres Strait Islander Heritage Documents for its Indigenous owners, and executive management in positions of management and control, including board members;

a copy of the businesses current and up-to-date Company Constitution;

a copy of the businesses Joint Venture Agreement or Shareholders Agreement which clearly outlines profit distribution, delegations of authority and power, clearly defined work portioning levels and the businesses trade/branding and procurement permissions or restrictions;

a copy of a Shared Services Agreement or Commercial Agreement with its non-Indigenous partners defining the arrangement for the joint venture accessing the partner’s resources;

a Skills and Capability Transfer Plan.
a. the plan should identify what the Indigenous JV partner is hoping to gain from their non-Indigenous business partner and through the JV relationship.
b. this plan should also include how the joint venture company will demonstrate how the transfer of capability to the Indigenous business will occur, such as the inclusion of milestones, KPIs, annual reporting etc;

an Indigenous Workforce Plan.
a. this plan should include identifying Indigenous employment goals and continued skills training of Indigenous employees.

verifying ownership document to identify owners – ensuring that at least 50% of the business is Aboriginal and/or Torres Strait Islander owned;

conducting interviews/site visits to verify Indigenous involvement in the management and control of the joint venture.

How long will my registration application take to be approved?

It is envisaged that if the initial application is complete with all of its documentation and meets initial criteria examination that your application will be processed within four (4) weeks of its completed lodgement (dependent on the availability to conduct a site visit/interview).

What if I am an existing joint venture already registered with Supply Nation?

To commence your updated registration, Supply Nation will be in contact with you advising you of the new registration criteria requirements and will require you to make an acknowledgement of your understanding of the new criteria and an undertaking that you have commenced or intend to work towards obtaining the required documentation and management and control structures by the new requirements deadline.

Supply Nation will commence formal auditing of existing registered joint ventures who acknowledge that they are ready to meet the new criteria from 1 January 2019 and will envisage having all existing registered joint ventures who wish to remain registered with Supply Nation on Indigenous Business Direct formally complete the full registration process and verified against the criteria by 30 June 2019.

Transition arrangements will apply for existing Indigenous joint ventures already registered with Supply Nation who require additional time to negotiate 50% Indigenous control of, and involvement in, the management of their joint venture and to prepare their required governance documentation for submission. This arrangement will cease on 30 June 2019.

If your existing registered joint venture is wishing to bid for Commonwealth contracts under the Indigenous Procurement Policy and you are yet to finalise the new registration, you will be required to provide the following document in your quote or tender response:

A copy of your joint venture’s email confirmation to Supply Nation that you will commence the registration process.

The Skills and Capability Transfer Plan and its Indigenous Workforce Plan that you propose to submit to Supply Nation as part of your registration process. (Supply Nation will have templates for these plans available for use).

Please note these plans will be independently reviewed by Supply Nation as part of the registration process. The registration process must be completed by 30 June 2019.

How will Supply Nation ensure joint ventures continue to meet the new eligibility requirements?

All registered joint ventures will be reviewed annually to confirm that the joint venture is operating in accordance with the plans submitted to Supply Nation. In addition, random spot checks will be conducted.

These reviews will include conducting a follow up site visit/interview and may require the submission of updated governance documents and plans.

How do I keep up to date with any changes or receive any further information?

To keep informed on the new registration process for incorporated Indigenous joint ventures visit, the Department of Prime Minister and Cabinet’s website.